2023 (8) TMI 1072 - AT - Income Tax

Gain on sale of Joint owned property - correct year of assessment - HELD THAT - Firstly there seems to be no fault of assessee when the assessee has done everything on 22.03.2011. The documents on record clearly establish that the consideration had been received and possession had also been given by/on 22.03.2011. Secondly, we are consciously aware of the decision of Hamada Ammal Vs. Avadiappa Pathar 1990 (11) TMI 414 - SUPREME COURT wherein held that vendee gets rights which will be related back on registration from the date of the execution of the sale deed and such rights are protected under Order XXXVIII Rule 10 CPC read together with Section 47 of the Registration Act. The sale-deed even if finally registered on 19.05.2011 would relate back to 22.03.2011 (i.e. date of execution). Being so, we agree to the contention of Ld. AR that the sale of land had taken place on 22.03.2011 in the financial year 2010-11 and the capital gain was taxable in AY 2011-12. The necessary outcome of this is such that the AO has wrongly assessed the capital gain in AY 2012-13 under consideration. Faced with this situation, we are inclined to delete the addition made by AO in AY 2012-13. The assessee succeeds in this claim.

Summary

Issues involved: Assessment of capital gain in the wrong assessment year, eligibility for exemption under section 54B.

Summary:

1. Assessment of capital gain in the wrong assessment year:
The appellant filed an appeal against the assessment-order passed by the Income Tax Officer (ITO) under section 147 read with section 144 of the Income-tax Act, 1961 for Assessment Year 2012-13. The appellant sold agricultural land jointly with others and earned capital gain. The Assessing Officer (AO) assessed the appellant's share of the consideration as long-term capital gain for the wrong assessment year. The Commissioner of Income-tax (Appeal) upheld the assessment for AY 2012-13 based on the registration date of the sale-deed. However, the appellant argued that the sale took place in the previous year relevant to AY 2011-12. The Appellate Tribunal considered the facts and legal provisions, including the Registration Act, and concluded that the sale-deed, though registered later, related back to the date of execution, i.e., 22.03.2011. Therefore, the capital gain was taxable in AY 2011-12, and the addition made by the AO for AY 2012-13 was deleted.

2. Eligibility for exemption under section 54B:
The appellant also claimed exemption under section 54B for investing in new agricultural land. However, since the Tribunal had already deleted the addition made by the AO, it did not adjudicate on the alternative claim for exemption under section 54B. The Tribunal allowed the appeal of the assessee based on the incorrect assessment of capital gain and did not delve into the exemption claim at that stage.

In conclusion, the Appellate Tribunal ITAT INODRE allowed the appeal of the assessee, ruling in favor of the appellant regarding the incorrect assessment of capital gain in the wrong assessment year. The Tribunal did not address the alternative claim for exemption under section 54B due to the deletion of the addition made by the AO for AY 2012-13.